"selling" 90-Year Lease Condo With 67 Years Left

[TaoNow]

Apologies if this topic has been thoroughly hashed over.

But sometimes the more recent reports of experience are the most useful, since procedures and the market can change.

A ex-pat friend from Phuket has raised the following questions.

Advice please, from those who've been in this position or know someone who has been.

(1) In 1989, my friend signed a 90-year lease on a condo not far from a popular beach.

He paid 800,000 baht equivalent for the 64-sq meter furnished condo.

(2) He understands that the lease is renewable every 30 years.

(3) What are his options for selling this lease-hold property?

(4) If he cannot sell, what happens when the first 30 years are up in 2019?

(5) About how much would he pay to renew the lease? (He was under the impression that the fee would not be that much.)

Many thanks for advice from the wise.

[TommoPhysicist]

(1) + (2) He only has a 7 year lease to sell, the rest is unenforceable in Thai law.

(3) there will be no buyers at any price.

(4) In 2019 he packs his stuff and leaves, allowing the owner vacant possession of his property.

(5) To renew his lease, he will (most likely) be asked to pay the current market value of the property.

Edited January 26, 2013 by TommoPhysicist

[LennyW]

(1) + (2) He only has a 7 year lease to sell, the rest is unenforceable in Thai law.

(3) there will be no buyers at any price.

(4) In 2019 he packs his stuff and leaves, allowing the owner vacant possession of his property.

(5) To renew his lease, he will (most likely) be asked to pay the current market value of the property.

Go to the top of the class.....100% correct!!

[Crossy]

Yup ^^^.

He could try renewing the lease now (for 30 years), at least then he would have something more saleable.

[BlackPuddingBertha]

(3) there will be no buyers at any price.

I would buy a 7-year lease on a nice unit that I would like to live in, but only at a significant discount to the rental value of said unit.

[melvinmelvin]

(1) + (2) He only has a 7 year lease to sell, the rest is unenforceable in Thai law.

(3) there will be no buyers at any price.

(4) In 2019 he packs his stuff and leaves, allowing the owner vacant possession of his property.

(5) To renew his lease, he will (most likely) be asked to pay the current market value of the property.

I wonder; is your (1)+(2) correct, strictly speaking?

I agree (with you) that Land Dept will not register more than a 30 year lease.

But, I cannot see that 2 parties can not make an agreement/contract for a 40 year lease,

or 30 year lease and then a contracted possibility for renewal at a certain price.

Might be tricky to enforce, but unenforcable?

[TommoPhysicist]

(1) + (2) He only has a 7 year lease to sell, the rest is unenforceable in Thai law.

(3) there will be no buyers at any price.

(4) In 2019 he packs his stuff and leaves, allowing the owner vacant possession of his property.

(5) To renew his lease, he will (most likely) be asked to pay the current market value of the property.

I wonder; is your (1)+(2) correct, strictly speaking?

I agree (with you) that Land Dept will not register more than a 30 year lease.

But, I cannot see that 2 parties can not make an agreement/contract for a 40 year lease,

or 30 year lease and then a contracted possibility for renewal at a certain price.

Might be tricky to enforce, but unenforcable?

The relevant Thai law states (rough translation).

In the event of any agreement being made in order to circumvent the maximum lease period of 30 years, that agreement will summarily be reduced to a term of 30 years in total.

Now you can't get much clearer than that.

Edited January 26, 2013 by TommoPhysicist

[Crossy]

Leases over 3 years must be registered at the land office or they are automatically invalid, the land office won't register anything over 30 years.

Any ideas of a lease over 30 years are simply unenforceable.

[davejones]

(1) + (2) He only has a 7 year lease to sell, the rest is unenforceable in Thai law.

(3) there will be no buyers at any price.

(4) In 2019 he packs his stuff and leaves, allowing the owner vacant possession of his property.

(5) To renew his lease, he will (most likely) be asked to pay the current market value of the property.

I would buy a 7-lease and so would thousands of others. So you are clearly wrong. e.g. if current rent is around 20K/month (240K/year), I'd pay 1 million for a property like this if it was in an area I wanted to live. People would be stupid to pay 7 years rent if they could get a similar property for the equivalent of 4 years rent.

Edited January 26, 2013 by davejones

[taninthai]

^

hello but you could buy a different condo in your name ,yours for life for 1 mb,why would you buy one that you have to give back after 7 years for the same price.

I would offer him 200k and that's being generous .

[davejones]

^

hello but you could buy a different condo in your name ,yours for life for 1 mb,why would you buy one that you have to give back after 7 years for the same price.

I would offer him 200k and that's being generous .

I was just giving an example, as I don't know prices in that area. If I only want to live there for 7 years, why would I buy a condo for life. It's an alternative to renting that's cheaper. Just showing that there is a market for these properties. Many people want to rent, so a 7-year lease at a big discount is like renting but much cheaper.

Just to make it clear for you, I'd give around 4 years rental value, so I'd be saving 3 years rent compared to renting a comparable place,

Edited January 26, 2013 by davejones

[Terry Newman]

I wonder where this 90 year lease crap came from? Dis some developer marketing to farlangs just pick the number 3 out of thin air as that would cover most peoples lives and that of their 50 year younger live in lover wife in some circumstances ? I have seen popular law sites peddle this too.

"Also a lease contract can contractually bind the lessor to agree to a second term of 30 years," but, but, but..........

[TommoPhysicist]

I wonder where this 90 year lease crap came from? Dis some developer marketing to farlangs just pick the number 3 out of thin air as that would cover most peoples lives and that of their 50 year younger live in lover wife in some circumstances ? I have seen popular law sites peddle this too.

"Also a lease contract can contractually bind the lessor to agree to a second term of 30 years," but, but, but..........

There are loads of crooked solicitors and property agents running this scam.

Many foreigners are desperate to own, and will believe anything they are told.

[Spoonman]

I would offer him 200k and that's being generous .

Yep, he has been paying rent of 34,750 PA for the past 23 years, so 200k is pretty much on the money.

[Khun Jean]

Well the 30 year renewable should be enforceable because it is a personal contract. If the owner is still the same a renewal can be made.

I suspect the renewal will be around the price you could buy it for, the lease suggests it is in the Thai quota but in the mean time there might be an opening. The question is then, is it worth it, probably you can rent right next door on a yearly base for a good price,

About selling the remaining 7 year, is that allowed in the contract?

The price could be 7 years rent with a 10-20% discount when paid in advance or you just charge rent per year/month. You can offer both, the one interested can then decide which is better value for them.

[LongTimeLurker]

I wonder where this 90 year lease crap came from? Dis some developer marketing to farlangs just pick the number 3 out of thin air as that would cover most peoples lives and that of their 50 year younger live in lover wife in some circumstances ? I have seen popular law sites peddle this too.

"Also a lease contract can contractually bind the lessor to agree to a second term of 30 years," but, but, but..........

There are loads of crooked solicitors and property agents running this scam.

Many foreigners are desperate to own, and will believe anything they are told.

Like the ones that form a company to buy land.

[taninthai]

^

hello but you could buy a different condo in your name ,yours for life for 1 mb,why would you buy one that you have to give back after 7 years for the same price.

I would offer him 200k and that's being generous .

I was just giving an example, as I don't know prices in that area. If I only want to live there for 7 years, why would I buy a condo for life. It's an alternative to renting that's cheaper. Just showing that there is a market for these properties. Many people want to rent, so a 7-year lease at a big discount is like renting but much cheaper.

Just to make it clear for you, I'd give around 4 years rental value, so I'd be saving 3 years rent compared to renting a comparable place,

I completely understand what your saying but you would still be better to buy a different place that is yours for life live in it for your 7 years or whatever then sell it on even if you sell it for what you bought it for you have lived 7 years rent free,there is definitely no big market for properties with a 7 year lease un less they are dead cheap and I mean real cheap,of coarse you will always have the chance of someone gullible or more money than sense come along and pay way over the odds for it.

[Khun Jean]

It is a fact that one is born every minute (it seems to have changed to one every second).

So chances of that happening might not be so small as initial thought.

[melvinmelvin]

(1) + (2) He only has a 7 year lease to sell, the rest is unenforceable in Thai law.

(3) there will be no buyers at any price.

(4) In 2019 he packs his stuff and leaves, allowing the owner vacant possession of his property.

(5) To renew his lease, he will (most likely) be asked to pay the current market value of the property.

I wonder; is your (1)+(2) correct, strictly speaking?

I agree (with you) that Land Dept will not register more than a 30 year lease.

But, I cannot see that 2 parties can not make an agreement/contract for a 40 year lease,

or 30 year lease and then a contracted possibility for renewal at a certain price.

Might be tricky to enforce, but unenforcable?

The relevant Thai law states (rough translation).

In the event of any agreement being made in order to circumvent the maximum lease period of 30 years, that agreement will summarily be reduced to a term of 30 years in total.

Now you can't get much clearer than that.

Yes, I've also come across that particular language a few times. But, so far, it has always been in the context of the

Land Dept's handling of leases re registration of leases.

[taninthai]

Op would be much better talking to the people he has the lease from ,no-one on here knows all the details or what the actual owner is willing to do about a sale eg the actual owner/developer may be willing to start a new 90 year lease(lol) with a new owner or if a Thai buyer maybe willing to change to free hold,it all depends how honest or willing the actual owner is and no-one on here can tell you that ,I'm sure a 5 minute chat to the right person and you will have all your answers the rest of the answers on here are gonna be speculation and guesswork as no one knows full details of contract.

[davejones]

Op would be much better talking to the people he has the lease from ,no-one on here knows all the details or what the actual owner is willing to do about a sale eg the actual owner/developer may be willing to start a new 90 year lease(lol) with a new owner or if a Thai buyer maybe willing to change to free hold,it all depends how honest or willing the actual owner is and no-one on here can tell you that ,I'm sure a 5 minute chat to the right person and you will have all your answers the rest of the answers on here are gonna be speculation and guesswork as no one knows full details of contract.

That's very true. But TV is full of people asking for answers from people who don't know, when they could easily pick up the phone and find the answer very quickly.

[Khun Jean]

Sometimes it is better to be prepared, and knowing more is never a disadvantage.